Abstract: Pulsed eddy current testing(PEC) is susceptible to lift-off effect because of the probe inclination or irregular sample surface, which has serious influence on the result of pulsed eddy current testing. A new technique to reduce lift-off effect based on second-order differential at starting point is proposed. The first thing is to build a lift-off reference database first, and afterwards to determine the lift-off value of experimental signals in the inspection by indexing second-order differential value at starting point in the lift-off reference database. Then the compensation ratio is calculated and a compensation formula is used to suppress the lift-off effect. After being processed by proposed method, the differential signals with lift-off noise agree well with the differential signals without lift-off noise. Experimental results show that the lift-off effect has been significantly reduced by using this method in internal defect detection of multi-layer metal structure with pulsed eddy current method.